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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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12/05/1994

[Federal Register: December 5, 1994]

 

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 93N-0252]

 

Atul Shah; Denial of Hearing; Final Debarment Order

 

AGENCY: Food and Drug Administration, HHS.

 

ACTION: Notice.

 

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SUMMARY: The Food and Drug Administration (FDA) denying Dr. Atul Shah's

request for a hearing and is issuing a final order under the Federal

Food, Drug, and Cosmetic Act (the act) permanently debarring Dr. Atul

Shah, 20 Hampton Hollow Dr., Millstone Township, NJ 08535, from

providing services in any capacity to a person that has an approved or

pending drug product application. FDA bases this order on a finding

that Dr. Shah was convicted of a felony under Federal law for conduct

relating to the development or approval, including the process for

development or approval, of a drug product, and relating to the

regulation of a drug product under the act.

 

EFFECTIVE DATE: December 5, 1994.

 

ADDRESSES: Application for termination of debarment to the Dockets

Management Branch (HFA-305), Food and Drug Administration, 12420

Parklawn Dr., rm. 1-23, Rockville, MD 20857.

 

FOR FURTHER INFORMATION CONTACT: Megan L. Foster, Center for Drug

Evaluation and Research (HFD-366), Food and Drug Administration, 7500

Standish Pl., Rockville, MD 20855, 301-594-2041.

 

SUPPLEMENTARY INFORMATION:

 

I. Background

   

Dr. Atul Shah, the former Director of Analytical Research and

Development at Par Pharmaceutical, Inc. (Par), pled guilty and was

sentenced on March 5, 1993, for making a false declaration to a grand

jury, a felony offense under 18 U.S.C. 1623. The basis for this

conviction was Dr. Shah's false claim during his testimony before the

Special Grand Jury for the United States District Court for the

District of Maryland that he could not remember that the pilot batch

for one of Par's generic drug products had been taken off accelerated

stability testing and then put back on stability testing. In fact, Dr.

Shah did remember during this testimony that the initial pilot batch

had failed accelerated stability testing, and that a new formulation of

that product had been put back on accelerated stability testing. This

testimony was material to the grand jury's investigation because Par

had filed a false abbreviated new drug application that failed to

disclose that the pilot batch had failed stability testing.

 

In a certified letter received by Dr. Shah on August 11, 1993, the

Deputy Commissioner for Operations offered Dr. Shah an opportunity for

a hearing on the agency's proposal to issue an order under section

306(a) of the act debarring Dr. Shah from providing services in any

capacity to a person that has an approved or pending drug product

application. FDA based the proposal to debar Dr. Shah on its finding

that he had been convicted of a felony under Federal law for conduct

relating to the development, approval, and regulation of Par's drug

products.

 

The certified letter also informed Dr. Shah that his request for a

hearing could not rest upon mere allegations or denials but must

present specific facts showing that there was a genuine and substantial

issue of fact requiring a hearing. The letter also notified Dr. Shah

that if it conclusively appeared from the face of the information and

factual analyses in his request for a hearing that there was no genuine

and substantial issue of fact which precluded the order of debarment,

FDA would enter summary judgment against him and deny his request for a

hearing.

 

In a letter dated August 25, 1993, Dr. Shah requested a hearing,

and in a letter dated October 8, 1993, Dr. Shah submitted arguments and

information in support of his hearing request. In his request for a

hearing, Dr. Shah acknowledges that he was convicted of a felony under

Federal law as alleged by FDA. However, Dr. Shah argues that FDA's

findings based on that conviction are incorrect and that the agency's

proposal to debar him is unconstitutional.

 

The Interim Deputy Commissioner for Operations has considered Dr.

Shah's arguments and concludes that they are unpersuasive and fail to

raise a genuine and substantial issue of fact requiring a hearing.

Moreover, the legal arguments that Dr. Shah offers do not create a

basis for a hearing (see 21 CFR 12.24(b)(1)). Dr. Shah's arguments are

discussed below.

 

II. Dr. Shah's Arguments in Support of a Hearing

 

A. Mandatory Versus Permissive Debarment

    

Dr. Shah first argues that mandatory debarment is inapplicable to

his case. He states that his false testimony subjects him to permissive

rather than mandatory debarment because his conduct underlying his

conviction does not relate to the development, approval, or regulation

of a drug product. Dr. Shah claims that his testimony ``pertained'' to

stability testing, but did not ``relate'' to stability testing.

 

This argument is unconvincing and fails to raise a genuine and

substantial issue of fact. Section 306(a)(2)(A) of the act (21 U.S.C.

335a(a)(2)(A)) requires debarment of an individual if FDA finds that

the individual has been convicted of a felony under Federal law for

conduct relating to the development or approval, including the process

for development or approval, of any drug product. The statutory

language, ``relating to the development or approval * * *,'' by

definition, encompasses all things that are logically connected with

the development or approval of a drug product (see Webster's Collegiate

Dictionary, Merriam-Webster Inc., Springfield, MA, 1990, ``relate'').

 

Dr. Shah's act of falsely testifying before the grand jury

concerning his knowledge about the stability testing used to support

approval of a Par drug product is clearly connected to the development

or approval of a drug product. Stability testing is an essential step

in the development and approval of a generic drug product.

 

Dr. Shah argues that he left Par long before his grand jury

testimony and, thus, this testimony could not have interfered with the

drug development and approval process. Whether or not Dr. Shah was

employed by Par at the time of his testimony is irrelevant. Dr. Shah's

testimony concerned, or was related to, FDA's approval of a Par drug

product, because it pertained to stability testing used to support

approval of that drug product.

 

Section 306(a)(2)(B) of the act requires debarment of an individual

if FDA finds that the individual has been convicted of a felony under

Federal law for conduct relating to the regulation of any drug product

under the act. Dr. Shah's conviction is related to the regulation of a

drug product in that it concerns matters that affect FDA's regulatory

decisions about drug products. Dr. Shaw's testimony concerns

information related to the stability of a drug product. FDA uses such

information to determine, among other things, whether to approve a

drug, whether to remove a drug from the market, whether labeling

changes are necessary, and whether approved marketing conditions need

to be altered. The act does not require that Dr. Shah's testimony

regarding stability testing directly affect FDA's regulatory decisions.

Rather, it need only relate to FDA's regulation of a drug product.

 

Dr. Shah contends that grand jury investigations have nothing to do

with the development and approval of a drug product. He additionally

states that the grand jury process is not a means by which FDA

regulates a company's drug products. To the contrary, FDA often

requests grand jury investigations to explore criminal activity

involving matters under the jurisdiction of FDA. Dr. Shah's crime of

lying before a grand jury relates to FDA's regulatory powers because it

interferes with the inquiry into criminal activity concerning drug

applications. Because his false declarations concerned matters relating

to the development, approval, and regulation of a drug product, Dr.

Shah's mandatory debarment is appropriate.

 

Dr. Shah also argues that the legislative history of the act

indicates that mandatory debarment is inapplicable in this case because

his crime did not ``corrupt'' or ``directly involve'' the approval

process. As mentioned above, Dr. Shah's crime is one that does corrupt

or perpetuate corruption of the FDA approval process because it

interfered with an investigation into criminal activity concerning

information used by FDA in deciding drug approval and other drug

regulatory issues. Whether the crime ``directly involves'' the approval

process is not the standard set forth in the statute for mandatory

debarment; ``directly involves'' does not have the same meaning as

``relates to.''

 

B. The Ex Post Facto Clause

    

Dr. Shah also argues that the ex post facto clause of the U.S.

Constitution prohibits application of section 306(a)(2) of the act to

him because this section was not in effect at the time of Dr. Shah's

criminal conduct. With the enactment of the Generic Drug Enforcement

Act (GDEA) on May 13, 1992, Congress amended the Federal Food, Drug,

and Cosmetic Act to include section 306(a)(2).

 

An ex post facto law is one that reaches back to punish acts that

occurred before enactment of the law or that adds a new punishment to

one that was in effect when the crime was committed. (Ex Parte Garland,

4 Wall. 333, 377, 18 L. Ed. 366 (1866); Collins v. Youngblood, 110

S.Ct. 2715 (1990).)

 

Dr. Shah's claim that application of the mandatory debarment

provisions of the act is prohibited by the ex post facto clause is

unpersuasive. Because the intent behind debarment under section

306(a)(2) of the act is remedial rather than punitive, this section

does not violate the ex post facto clause.

 

The congressional intent with respect to actions under section

306(a)(2) of the act is clearly remedial. Congress created the GDEA in

response to findings of fraud and corruption in the generic drug

industry. Both the language of the GDEA itself and its legislative

history reveal that the purpose of the debarment provisions set forth

in the GDEA is ``to restore and ensure the integrity of the ANDA

approval process and to protect the public health.'' (See section 1,

Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.) This is a

remedial rather than punitive goal. (See Manocchio v. Kusserow, 961

F.2d 1539, 1542 (11th Cir. 1992) (exclusion of physician from

participation in medicare programs because of criminal conviction is

remedial, not punitive).) Supporting the remedial character of

debarment is a statement by Senator Hatch in the Congressional Record

of April 10, 1992, at S 5616, ``* * * [t]he legislation * * * provides

a much-needed remedy for the blatant fraud and corruption uncovered in

the generic drug industry * * * during the last 3 years.''

 

The Supreme Court has long held that statutes that deny future

privileges to convicted offenders because of their previous criminal

activities in order to insure against corruption in specified areas do

not impose penalties for past conduct and, therefore, do not violate

the ex post facto prohibitions. (See, e.g., Hawker v. New York, 170

U.S. 189, 190 (1898) (physician barred from practicing medicine for a

prior felony conviction); DeVeau v. Braisted, 373 U.S. 154 (1960)

(convicted felon's exclusion from employment as officer of waterfront

union is not a violation of the ex post facto clause).)

 

In DeVeau, the court upheld a law that prohibited a convicted felon

from employment as an officer in a waterfront union. The purpose of the

law was to remedy the past corruption and to insure against future

corruption in the waterfront unions. The court in DeVeau, 363 U.S. at

160, stated:

    

The question in each case where unpleasant consequences are

brought to bear upon an individual for prior conduct, is whether the

legislative aim was to punish that individual for past activity, or

whether the restriction of the individual comes about as a relevant

incident to a regulation of a present situation, such as the proper

qualifications for a profession * * * .

    

As in DeVeau, the legislative purpose of the relevant statute is to

ensure that fraud and corruption are eliminated from the drug industry.

The restrictions placed on individuals convicted of a felony under

Federal law are not intended as punishment but are ``incident to a

regulation of a present situation'' (DeVeau, 363 U.S. at 160) and

necessary in order to remedy the past fraud and corruption in the

industry.

 

C. The Double Jeopardy Clause

    

In another argument, Dr. Shah claims that the proposal to debar him

under section 306(a)(2) of the act violates the double jeopardy clause

of the Fifth Amendment to the U.S. Constitution. The double jeopardy

clause states that no person shall ``be subject for the same offense to

be twice put in jeopardy of life or limb.'' Dr. Shah relies on U.S. v.

Halper, 490 U.S. 435 (1989), to argue that the Fifth Amendment double

jeopardy clause should prevent his debarment because ``jeopardy'' can

attach even in a purely civil proceeding, so long as the civil sanction

is punitive, not remedial. He further argues that his proposed

permanent debarment is punitive because (1) it is permanent and without

regard to whether Dr. Shah represents a continuing threat to the

integrity of the drug testing, approval, or regulatory processes; (2)

it precludes his providing services in any capacity to a company whose

products are subject to FDA approval, regardless of whether or not the

service relates to drug testing, approval, or regulation; (3) it can be

terminated only for substantial assistance to prosecutors and not when

the threat to public safety is eliminated; and (4) it arises out of the

mere fact of conviction and precludes factfinding into whether a risk

to the public exists.

 

Dr. Shah's arguments are unpersuasive. First, ``jeopardy'' cannot

attach because the effect of section 306(a)(2) of the act is remedial,

not punitive. As discussed above, the legislative goal of this section

is to restore and ensure the integrity of the drug approval process and

to protect the public health by eradicating fraud and corruption from

the drug industry. This is plainly a remedial rather than punitive

goal. (Manocchio v. Kusserow, 961 F.2d at 1542.)

 

The fact that Dr. Shah's debarment is permanent rather than

temporary does not signify that the legislation is nonremedial or

punitive. The Supreme Court has upheld laws which, for remedial

purposes, permanently bar a class or group of individuals from certain

occupations due to a prior criminal conviction. (See Hawker v. New

York, 170 U.S. 189, 190 (1898); DeVeau v. Braisted, 373 U.S. 154

(1960).) Additionally, these cases support the fact that Dr. Shah's

debarment can arise only because of his conviction, which Dr. Shah

argues is punitive.

 

Dr. Shah's conduct, which has been shown to relate to the

development, approval, and regulation of a drug product, establishes

the potential for future violations by Dr. Shah that undermine the

integrity of the drug approval and regulatory process. The act

precludes Dr. Shah's providing any type of service to holders of drug

product applications because of this possibility of future violations.

Congress proscribed all services in order to avoid the serious

administrative difficulties involved in distinguishing between those

positions clearly related to drug regulation from those not clearly

related. Such a proscription for this reason is permissible. Siegel v.

Lyng, 851 F.2d 412, 416 (D.C. Cir. 1988.)

 

Dr. Shah's assertion that the special termination provision is

punitive is unpersuasive. In fact, the provision advances the remedial

objective of ensuring the safety and efficacy of the country's drug

supply. The cooperation fostered by this special termination provision

enables FDA to eliminate from the drug industry many actors who are

corrupting the industry, endangering the public health, and destroying

consumers' confidence in the Nation's drug supply. Convictions based on

debarred persons' assistance can form the basis for other debarments if

the terms of the act are satisfied, which further serves the act's

remedial objectives.

 

An individual's debarment will not be terminated if FDA finds that

the remedial intent of the act will be undermined by such termination.

The act does not guarantee termination of debarment to those who are

debarred. The power to terminate debarment is discretionary with FDA,

and the agency is bound by the provision's terms to exercise this

authority in a manner consistent with the interest of justice and

protection of the integrity of the drug approval process (21 U.S.C.

335a(d)(4)(D)).

 

Due to the potentially serious consequences to the public health of

fraud and corruption in the drug industry, the permanent debarment of

convicted felons like Dr. Shah is not an excessive means to eliminate

fraud from the industry. The legislative history of the GDEA is replete

with statements, some cited above, that the act provides a reasonable

means of ridding the drug industry of widespread corruption and to

restore consumer confidence in generic drugs.

 

D. Due Process

    

In his final argument, Dr. Shah claims that his debarment violates

the due process clause of the U.S. Constitution because it bears no

rational relationship to any legitimate purpose. He asserts that his

conduct does not automatically demonstrate a likelihood of future

violations under the act. He also contends that debarment precludes

providing services regardless of whether such service bears any

relationship to the development, approval, or regulation of a drug

product.

 

Dr. Shah's claims are unpersuasive. Dr. Shah fails to demonstrate

that this debarment is unrelated to any legitimate purpose. Although

his conduct does not automatically establish a likelihood of future

violations, it does reveal the possibility of future violations.

Debarment guards against future violations by prohibiting individuals

``from providing services in any capacity to a person that has an

approved or pending drug product application'' in order to meet the

legitimate regulatory purpose of restoring the integrity of the drug

approval and regulatory process and protecting the public health. Dr.

Shah acknowledges that protecting the public health is a legitimate

purpose. As mentioned above, Congress can appropriately achieve this

purpose by proscribing ``all services'' due to the serious

administrative difficulties involved in distinguishing between those

positions clearly related to drug regulation from those not clearly

related. These difficulties would include the problem of ascertaining

the exact nature of the employee's relationship with the employer as

well as defining what constitutes a sufficient nexus with the

regulatory scheme under all circumstances.

 

Dr. Shah's claim that FDA's refusal to grant a hearing in his case

would violate procedural due process is inaccurate. Dr. Shah

acknowledges that he was convicted as alleged by FDA and has raised no

genuine and substantial issue of fact regarding his conviction. The

facts underlying Dr. Shah's conviction have been established by his

conviction, and, therefore, are not at issue. While Dr. Shah's legal

arguments do not create a basis for a hearing, FDA has considered these

arguments before taking final action and has found them unpersuasive.

Accordingly, the Interim Deputy Commissioner for Operations denies Dr.

Shah's request for a hearing.

 

III. Findings and Order

    

Therefore, the Interim Deputy Commissioner for Operations, under

section 306(a) of the act, and under authority delegated to her (21 CFR

5.20) finds that Dr. Atul Shah has been convicted of a felony under

Federal law for conduct: (1) relating to the development or approval,

including the process for development or approval, of a drug product

(21 U.S.C. 335a(a)(2)(A)); and (2) relating to the regulation of a drug

product (21 U.S.C. 335a(a)(2)(B)).

 

As a result of the foregoing findings, Dr. Atul Shah is permanently

debarred from providing services in any capacity to a person with an

approved or pending drug product application under section 505, 507,

512, or 802 of the act (21 U.S.C. 355, 357, 360b, or 382), or under

section 351 of the Public Health Service Act (42 U.S.C. 262), effective

December 5, 1994. (21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(ii) and 21

U.S.C. 321(ee)).

 

Any person with an approved or pending drug product application who

knowingly uses the services of Dr. Shah in any capacity, during his

period of debarment, will be subject to civil money penalties (21

U.S.C. 335b(a)(6)). If Dr. Shah, during his period of debarment,

provides services in any capacity to a person with an approved or

pending drug product application, he will be subject to civil money

penalties (21 U.S.C. 335b(a)(7)). In addition, FDA will not accept or

review any abbreviated new drug application or abbreviated antibiotic

drug application submitted by or with Dr. Shah's assistance during his

period of debarment.

 

Dr. Shah may file an application to attempt to terminate his

debarment pursuant to section 306(d)(4)(A) of the act. Any such

application would be reviewed under the criteria and processes set

forth in section 306(d)(4)(C) and (d)(4)(D) of the act. Such an

application should be identified with Docket No. 93N-0252 and sent to

the Dockets Management Branch (address above). All such submissions are

to be filed in four copies. The public availability of information in

these submissions is governed by 21 CFR 10.20(j). Publicly available

submissions may be seen in the Dockets Management Branch between 9 a.m.

and 4 p.m., Monday through Friday.

    

Dated: November 21, 1994.

Linda A. Suydam,

Interim Deputy Commissioner for Operations.

[FR Doc. 94-29768 Filed 12-2-94; 8:45 am]

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